Customs Procedures and Functioning of Container Freight ...

or, in the case of importers who are also Central Excise assessees, paid Central Excise Duties
over Rs. One Crore from the Personal Ledger Account in the previous financial year.
(ii) They should have filed at least 25 Bills of Entry in the previous financial year in one or more
Indian Customs stations.
(iii) They should have no cases of Customs, Central Excise or Service Tax booked against them
in the previous three financial years. Cases booked would imply that there should be at least
a show cause notice, invoking penal provisions, issued to an importer.
(iv) They should also not have any cases booked under any of the Allied Acts being implemented
by Customs.
(v) The quality of the submissions made by the applicants to Customs should be good as
measured by the number of amendments made in the bills of entry submitted by them
in relation to classification of goods, valuation and claim for exemption benefits. The number
of such amendments should not have exceeded 20% of the bills of entry during the previous
financial year.
(vi) They should have no duty demands pending on account of non-fulfillment of Export
obligation.
(vii) They should have reliable systems of record keeping and internal controls and their accounting
systems should conform to recognized standards of accounting. They are required to provide the
necessary certificate from their Chartered Accountants in this regard as per format given in the
Application form.

For qualifying for the ACP, the applicants will have to satisfy any one of the criteria set out at serial
number (i) and all the other criteria set out above. Further, the accreditation would initially be valid
for a period of one year and would be renewable thereafter upon a review of the compliance record
of the Accredited Client.

8. The Board is shortly establishing the ‘Risk Management Division’ in the Directorate General
of Systems, which will inter alia be administering the Accredited Clients Program. The list
of Accredited Clients will be maintained centrally in the Risk Management System. Pending the
establishment of the division, the importers may apply to the Commissioners in charge of the ports
through which they import goods. The Commissioners will, after scrutiny of the applications,
forward them to RMS project team in the Directorate of Systems with their recommendations.

9. The importers who have been granted the status of Accredited Clients will be required to
maintain high levels of compliance. It will be closely monitored by the Risk Management Division
in co-ordination with the Commissioners of Customs and where compliance levels fall, the importer
will first be informed for improvement. In case of persistent non compliance, the importer may
be deregistered under the Accredited Client’s Program.

52 • Report of the Inter Ministerial Group

10. In order to ensure that there is no misuse of the program by imposters (persons who assume
the Accredited Client’s name and identity), it would be mandatory for the accredited clients under the
ACP to file bills of entry using digital signatures. Therefore, importers are advised to obtain Digital
Signature Certificates being issued by CBEC. Where the Accredited Clients are filing their documents
through their Custom House Agents, they must advise their Custom House Agents to file their bills
of entry using digital signatures granted to them by the department. For obtaining Digital Signature
Certificates, the trade may visit the site at www.icert.gov.in.

11. Additionally, all bills of entry must be filed by Accredited Clients through the ICEGATE facility
and duty in respect of these consignments must be paid though such Clients’ bank account at the
designated bank.

12. Initially, this scheme will be launched for Imports at Air Cargo Complex, Sahar where the
RMS roll out is likely to commence in the month of November 2005. This would be followed by the
progressive roll out of the RMS at other locations where EDI is operational. The importers who are
registered as Accredited Clients under the ACP scheme would get its benefits at all the locations
where RMS is operationalised. To facilitate migration of the eligible importers to the new scheme,
it has been decided that its benefits would be automatically extended to importers who are availing
of any of the existing facilitation schemes for a period of three months. This is to enable such
importers to apply for the Accredited Clients Programme and get registered under it. It is also
clarified that the existing schemes for facilitation would continue at each of the EDI sites till
the RMS is implemented at that site.

13. Detailed instructions as regards the other aspects of the Risk Management System will follow.

14. The details of the ACP scheme along with the Application Package are available at
www.cbec.gov.in and www.icegate.gov.in. Wide publicity may be given to this scheme through
the recognized trade bodies and chambers of commerce.

15. Receipt of this Circular may be acknowledged.

16. Hindi version will follow.

Yours faithfully
Sd-

(Anupam Prakash)
Under Secretary to the Government of India

Phone No.23094182

Customs Procedures and Functioning of Container Freight Stations and Ports • 53

Copy to:
1. PS to Chairman (E&C),
2. All Members, CBEC
3. CDR,CESTAT
4. All Directorates, CBEC
5. All Commissioners, CBEC
6. All Joint Secretaries/Directors/Deputy Secretaries, CBEC
7. All Under Secretaries/STOs/TOs,CBEC
8. Guard file.

Sd-
(Anupam Prakash)
Under Secretary to the Government of India

54 • Report of the Inter Ministerial Group

Annexure-1

Application form for Accredited Clients Programme:

(Please refer to Para 7 of the Circular)

S.No.

1 Name of the Importer

2 PAN based BIN
[Self Attested copy of PAN number to be attached
with Application form]

3 IEC

4 Date of Issue of IEC

5 State whether a Manufacturer or Trader with details
of major items Manufactured and/or imported

6 Constitution of business.
Proprietorship,
Partnership
Registered Co.
Unregistered Co.
Trust
Society
Others

7 Bank Account Details with Account No & Name
of the Bank, Address and date since operated.

8 History of the Importer.
Whether any business was owned by the importer
in the past, if so previous PAN, IE Code, Central
Excise Registration Number, with all details
including address, telephone number, fax no,
Email Address.

9 Do you posses any Quality Accreditations such
as ISO? If yes, please specify the particulars.

Customs Procedures and Functioning of Container Freight Stations and Ports • 55

S.No.

10 Have you implemented any ERP solutions for your
accounting, inventory control and logistics? If yes,
please specify the package.

11 Mention your Joint Venture partners, if any with
details i.e Address, Telephone, Fax, E-Mail.

12 Corporate Address
City
State
PIN
Telephone No
FAX Number
Email Address

13 Managing Director / Chief Executive officer
Name
Address
PAN No

Telephone
Fax
E-mail Address

14 Directors/Partners
Name
Address
PAN

Telephone
Fax
E-mail Address

15 Are the Managing Directors and Directors of the
applicant Company listed as directors of any other
Company? If yes, please furnish the particulars.

56 • Report of the Inter Ministerial Group

S.No.

16 Name of the Department(s) handling Customs
matters
Name(s) of the person(s) in charge
Address
Telephone
Fax
E-mail Address
(Port wise details to be furnished if applicable)

17 List of Outsourced activities relating to Customs
and respective firms/persons (Inland transporters,
logistics, freight forwarders etc.,)
Name of the firm:
Activity:
Address:
Telephone:
Email Address:

18 List of Custom House Agents employed at each
port, with date(s) of appointment of the CHA.
CHA Name:
Port:
CHA address:
Phone:
Email address:

19 Customs Special Valuation Branch [SVB]
Registration Number, if any, with details including
that of last review by the Custom House

20 Central Excise registration No(s)
Date of Issue
Commissionerate
Division
Range

Customs Procedures and Functioning of Container Freight Stations and Ports • 57

S.No.

21 Service Tax Registration No
Date of Issue
Commissionerate
Division
Range

22 No of Bills of Entry filed at each port in the
previous financial year. Please furnish the details
port-wise.

23 Value of Imports at each port and total duty paid
in the previous financial year.

24 Details of disputes pending with the Customs
(pl attach a brief about each dispute from the
Company’s perspective)

25 Has the applicant been penalized under Customs
Act/Central Excise Act/ Service Tax and/or any
other enactments implemented by the Customs
department, in the previous 3 financial years?
If Yes, Details of the connected Show cause notice
(s), adjudication order(s) etc. may be furnished,
along with the present position of the cases,
if pending in Appellate or Judicial forums.

26 Have the Managing Director or any of the
Directors been penalized under Customs Act
or Central Excise Act/Service Tax enactment?
Details, if yes

27 Are you enjoying Green Channel/Fast Track
facility at any port today? If yes then list the ports
and the date(s) from which the facility is being
availed of.

58 • Report of the Inter Ministerial Group

S.No.

28 Name and designation of the Authorized Signatory
PAN No of Authorized signatory
Address
Telephone No
FAX number
Email Address

Declaration:

1. I/We hereby affirm that the particulars furnished above have been verified from my/our internal
records and are true and complete disclosures. I/We accept that any discrepancy noticed by the
department may debar us at the threshold or at any stage thereafter from obtaining/continuing with
the Accredited Client Status. Any change in the said particulars will be intimated to the
Commissioner of Customs within a fortnight of such being occasioned.

2. I/We understand that the Accredited Client status which may be conferred on us is an expression
of the Customs department’s trust in my/our ability and willingness to comply with the Acts,
Rules, Regulations and policies that the Customs department is required to implement.

3. I/We have understood the conditions listed in the Accredited Client Program document for
continued enjoyment of the status and undertake to abide by them. We also understand that waiver
of examination of our documents or goods cannot be claimed as a legal right by me/us in every
instance.

4. I/We are willing to align our systems with the requirements of the Customs department and incur
reasonable expenditure on such initiatives.

5. I/We accept that the decision of the Customs department in any matter concerning grant,
revocation or curtailment of the Accredited Client status will be final and binding on me/us.

Date:
Place:

Authorized Signatory

Name
Designation

Customs Procedures and Functioning of Container Freight Stations and Ports • 59

Format of Auditor’s/Chartered accountant’s
certificate to be submitted by ACP Applicants.

(Please refer to Para 7 (vii) of the Circular)
This is to certify that we have gone through the accounts maintained by Messrs._____ [Importer]
and do hereby certify that the accounting systems followed by Messrs.________ [Importer]
conform to the accounting standards prescribed by the Institute of Chartered Accounts of India.
We also certify that the systems of _________ [Importer] provide for maintenance of records
relating to the receipt, usage and disposal of imported goods for at least a period of five years
from the date of import.
We also certify that the Messrs.______ [Importer] have/have not implemented ERP based solutions
for their accounts and inventory management systems.

Signature of Authorized signatory
Statutory Auditor /Chartered Accountant

60 • Report of the Inter Ministerial Group

Circular No. 43/2005-Cus

F.No.450/66/2004-CUS-IV
Government of India
Ministry of Finance

Department of Revenue
Central Board of Excise & Customs

New Delhi, November 24th, 2005
To,

All Chief Commissioner of Customs,
All Chief Commissioner of Central Excise,
All Chief Commissioner of Customs & Central Excise,
Director General, Directorate of Revenue Intelligence,
[email protected]

Sir,

Subject: Introduction of Risk Management System (RMS) in Imports- regarding-

Attention is invited to the Board's circular letter F.No.450/30/2003-Cus-IV dated 4th April, 2003
on Self Assessment Scheme for Accelerated Clearance of Import/Export Cargo and Board’s Circular
No. 42/2005-Cus dated 24.11.05 on Accredited Clients Program. An Inter Ministerial Group (IMG)
headed by Secretary (Revenue) consisting of representatives from Ministry of Shipping, Ministry
of Commerce, Planning Commission besides CBEC, recommended to Introduce Risk Management
System (RMS) as a measure of trade facilitation and for selective screening of only high risk cargo
for customs examination. Such systems should provide for a special customs clearance procedure
for authorized persons (Accredited Clients) having good track record and who meet specified criteria
identified by the Customs.

2. The Board has decided to introduce the ‘Risk Management System’ (RMS) in major Customs
locations where the Indian Customs EDI System (ICES) is operational. The implementation of the
RMS is one of the most significant steps in the ongoing Business Process Re-engineering initiatives
of the Customs and Central Excise Department.

3. The ever increasing volumes and complexity of international trade and the deteriorating global
security scenario present formidable challenges to Customs. The exponential growth in trade volumes
means that the traditional approach of scrutinizing every document and examining every consignment

Customs Procedures and Functioning of Container Freight Stations and Ports • 61

will simply not work, as it would neither be desirable nor possible to constantly increase the
resources with the increasing workload. Also, there is a need to reduce the dwell-time of cargo
at the ports and airports and to reduce the transaction costs in order to enhance the competitiveness
of Indian businesses, by expediting release of cargo where compliance is high. This necessitates
that the department should be selective in its approach to deployment of its resources. The advances
in Information Technology offer an opportunity to address these challenges faced by the department
by putting in place an effective risk management system. The primary objective of the Risk
Management System, therefore, is to strike an optimal balance between facilitation and enforcement
and to promote a culture of compliance. It is intended to improve the management of the resources
of the department to enhance the efficiency and effectiveness in meeting stakeholder expectations
and to bring the Customs processes at par with the best international practices.

4. With the introduction of the RMS, the present practice of routine assessment, concurrent audit
and examination of almost all Bills of Entry will be discontinued and the focus will be on quality
assessment, examination and Post Clearance Audit of Bills of Entry selected by the Risk Management
System.

5. Bills of Entry and IGMs filed electronically into ICES through the Service Centre or the
ICEGATE will be transmitted by ICES to the RMS. The RMS will process the data through a series
of steps and produce an electronic output for the ICES. This output will determine whether the
Bill of Entry will be taken-up for action (appraisement or examination or both) or be cleared after
payment of duty and Out of Charge directly, without any assessment and examination. Also where
necessary, RMS will provide instructions for Appraising Officer, Examining Officer or the Out-of-
Charge Officer. It needs to be noted that the decisions communicated by the RMS on the need for
assessment and/or examination and the appraising and examination instructions communicated
by the RMS have be followed by the field formations. It is possible that in a few cases, the field
formations might decide to apply a particular treatment to the BE which is at variance with the
decision received from the RMS owing to risks which are not factored in the RMS. Such a course
of action shall however be taken only with the prior approval of the jurisdictional Commissioner
of Customs or an officer authorized by him for this purpose, who shall not be below the rank
of Addl./Joint Commissioner of Customs, and after recording the reasons for the same. A brief
remark on the reasons and the particulars of Commissioner’s authorization should be made by the
officer examining the goods in the departmental comments in the EDI system.

6. The existing system of concurrent audit shall be abolished and replaced by a Post-Clearance
Compliance Verification (Audit) function. The objective of the Post Clearance Verification
Programme is to monitor, maintain and enhance compliance levels, while reducing the dwell time
of cargo. The RMS will select the bills of entry for audit, after clearance of the goods, and these

62 • Report of the Inter Ministerial Group

selected bills of entry will be directed to the audit officers for scrutiny by the EDI system. In case
any possible short levies are noticed, the officers will issue a Consultative Letter setting out the
grounds for their view to the Importers/CHAs. This is intended to give the importers an opportunity
to voluntarily comply and pay the duty difference if they agree with the department’s point of view.
In case there is no agreement, the formal processes of demand notices, adjudication etc. would follow.
It may also be noted that the auditors are specifically being instructed to scrutinize declarations
with reference to data quality and advise the importers/CHAs suitably where the quality of their
declarations is found deficient. Such advice is expected to be followed and will be monitored by the
local risk managers. It hardly needs emphasis that compliance in all its dimensions is in the mutual
interest of the Government and the Trade and Industry and it will enable the government of give
increasing levels of facilitation. The Importers/CHAs are urged to co-operate in the department’s
efforts in this direction.

7. The national management of the Risk Management System shall be the responsibility of the
Risk Management Division, being established under the Directorate General of Systems. There will
be a local Risk Management System catering to the needs of the Custom Houses. The local Risk
Management System will carry out the live processing of the Bills of Entry and Import General
Manifests etc. The Commissioners of Customs are required to appoint the administrator for the
‘Local Risk Management System’ at the level of the Joint/Additional Commissioner for assigning
user privileges on the Local Risk Management System.

8. The implementation of RMS will necessitate reorganization of staff. Custom Houses are required
to undertake a comprehensive re-organization of the officers deployed for processing Bills of Entry.
The present appraising facilities should be right-sized in tune with the reduced quantum of Bills of
entry coming for assessment. Such staff should be diverted to the Post Clearance Audit. The strength
of the staff for examination of cargo would also be required to be readjusted.

9. The existing facilitation schemes viz., the Self-assessment scheme, Fast track / green channel
scheme, Accelerated customs clearance schemes etc., would be phased out with the implementation
of the RMS and the Accredited Clients Programme. As the deployment of the RMS is likely to take
place in phased manner across the ICES locations, the existing facilitation schemes will continue
to be operative in each Customs station until the operationalisation of the RMS at that station.

10. NACEN will support the RMD in conducting the necessary training of the officers for running
and managing the RMS at the ICES locations.

11. Detailed draft Public Notices, Standing Orders and Instruction Manuals will be forwarded
by the DG (Systems) separately.

Customs Procedures and Functioning of Container Freight Stations and Ports • 63

12. Receipt of this circular may please be acknowledged.
13. Hindi version will follow.

Yours faithfully
Sd-

(Anupam Prakash)
Under Secretary to the Government of India

Phone No.23094182
Copy to:
1. PS to Chairman (E&C),
2. All Members, CBEC
3. CDR,CESTAT
4. All Directorates, CBEC
5. All Commissioners, CBEC
6. All Joint Secretaries/Directors/Deputy Secretaries, CBEC
7. All Under Secretaries/STOs/TOs,CBEC
8. Guard file.

Sd-
(Anupam Prakash)
Under Secretary to the Government of India

64 • Report of the Inter Ministerial Group

Circular No. 44/2005-Cus

F.No.450/66/2004-CUS-IV
Government of India
Ministry of Finance

Department of Revenue
Central Board of Excise & Customs

New Delhi, November 24th, 2005

To,
All Chief Commissioner of Customs,
All Chief Commissioner of Central Excise,
All Chief Commissioner of Customs & Central Excise,
Director General, Directorate of Revenue Intelligence,
Director General of Systems and Data Management,
[email protected]

Sir,

Subject: Delayed, incomplete or incorrect filing of Import Manifest or Import Report- Reg.

I am directed to invite your attention to Board’s Circular No. 13/2005-Cus, dated 11.03.2005.
The intention of the prevailing Circulars/instructions is to ensure correct filing of Import General
Manifest/report, complete in all respects, so as to reduce overall dwell time of cargo. Further, the
nature of amendments were also classified in two broad categories ‘major’ and ‘minor’ to enable
for immediate approval.

2. It has been brought to the knowledge of Board that all cases requiring “major amendments”
in import manifest are being put up to proper officer for adjudication. The process of adjudication
entails delay in the clearance of goods as a proper hearing has to be given and a speaking order has
to be issued after taking into account full facts of the case and submissions made by the concerned
agencies. Ministry of Shipping and various Industry Associations have represented on this issue.
It has been suggested that major amendments which do not affect the Customs revenue substantially,
should be permitted by the proper officer according to the merits of the case.

3. The matter was re-examined. It has been decided by the Board that all amendments to the Import
General Manifest (IGM) may be considered on the basis of the provisions contained in section 30(3)
of the Customs Act, 1962. The said section (sub-section 3) provides that if the proper officer is

Customs Procedures and Functioning of Container Freight Stations and Ports • 65

satisfied that the import manifest or import report is in any way incorrect or incomplete, and that
there was no fraudulent intention, he may permit it to be amended or supplemented. Hence the need
for adjudication will arise only in cases where there are major amendments involving fraudulent
intention or substantial revenue implication arising from the amendments. Further it is possible
that in certain special situations such as mother/daughter vessel operation for lighterage on account
shortage of draft, congestion of port, natural calamity, the final quantity of goods covered by the
IGM would be known only after completion of such lighterage operation, requiring amendment
in quantity originally declared at the time of filing IGM. These exceptional situations need to be
taken care so that penal action is not initiated mechanically in such situations.

4. The Board’s Circular No. 13/2005-Cus, dated 11.03.2005 should be read as amended to the above
extent. The above instructions may be brought to the notice of the Trade immediately through
appropriate Public Notice.

5. Receipt of this Circular may kindly be acknowledged.

6. Hindi version will follow.

Yours faithfully

Sd-
(Anupam Prakash)
Under Secretary to the Government of India
Phone No.23094182

Copy to:

1. PS to Chairman (E&C),
2. All Members, CBEC
3. CDR,CESTAT
4. All Directorates, CBEC
5. All Commissioners, CBEC
6. All Joint Secretaries/Directors/Deputy Secretaries, CBEC
7. All Under Secretaries/STOs/TOs,CBEC
8. Guard file.

Sd-
(Anupam Prakash)
Under Secretary to the Government of India

66 • Report of the Inter Ministerial Group

Circular No. 45/2005-Cus

F.No.450/66/2004-CUS-IV
Government of India
Ministry of Finance

Department of Revenue
Central Board of Excise & Customs

New Delhi, November 24th, 2005

To,

All Chief Commissioner of Customs,
All Chief Commissioner of Central Excise,
All Chief Commissioner of Customs & Central Excise,
Director General, Directorate of Revenue Intelligence,
Director General, Director General of Systems and Data Management,
[email protected]

Sir,

Subject: Transshipment of import and export cargo - waiver of bank guarantee - Reg.

I amdirected to invite your attention to Board’s Circular No. 78/2001-Customs, dated 7.12.2001.
The above circular prescribes the bond and amount of bank guarantee to be taken in case
of transshipment of cargo from the gateway port to feeder ports/ICDs/CFSs and vice versa.
It also provides for the category of persons who are exempt from executing bank gurantee

2. It has been brought to the knowledge of Board that that the present exemption for bank guarantee
should be reexamined and extended to all agencies-ICDs/CFSs/carriers undertaking transshipment
of cargo, so that cargo could be moved faster from ports and congestion avoided in ports.

3. The matter was re-examined. It has been decided by the Board to waive the requirement of
execution of bank guarantee for the purpose of transshipment for all carriers of containerized cargo,
who are handling more than 1000 TEUs as import containers in a financial year. This waiver would
apply not only to shipping lines but also to ICDs/CFSs/ other carriers and for carriage in all modes
of transshipment, irrespective of their movement by road, coastal shipping or rail.

4. Further, there could be some carriers who may be having annual transshipment volume below the
limit of 1000 TEUs, but may have good track record, requesting for considering exemption from BG

Customs Procedures and Functioning of Container Freight Stations and Ports • 67

on merits. Such requests can be considered by the jurisdictional Commissioners of Customs
in deserving cases for giving waiver of bank guarantee requirement for carriage of goods
on transshipment.

5. The Board’s Circular No. 52/2004-Cus, dated 7.10.2004 and No.78/2001-cus. dated 7.12.2001
would stand modified to the above extent. The above instructions may be brought to the notice
of the Trade immediately through appropriate Public Notice.

6. Receipt of this Circular may kindly be acknowledged.

7. Hindi version will follow.

Yours faithfully

Sd-
(Anupam Prakash)
Under Secretary to the Government of India
Phone No.23094182

Copy to:

1. PS to Chairman (E&C),
2. All Members, CBEC
3. CDR,CESTAT
4. All Directorates, CBEC
5. All Commissioners, CBEC
6. All Joint Secretaries/Directors/Deputy Secretaries, CBEC
7. All Under Secretaries/STOs/TOs,CBEC
8. Guard file.

Sd-
(Anupam Prakash)
Under Secretary to the Government of India

68 • Report of the Inter Ministerial Group

Circular No. 46/2005-Cus

F.No.450/66/2004-CUS-IV
Government of India
Ministry of Finance

Department of Revenue
Central Board of Excise & Customs

New Delhi, November 24th, 2005

To,

All Chief Commissioner of Customs,
All Chief Commissioner of Central Excise,
All Chief Commissioner of Customs & Central Excise,
Director General, Directorate of Revenue Intelligence,
Director General, Director General of Systems and Data Management,
[email protected]

Sir,

Subject: Automation of movement of containerized cargo from Gateway Ports
to hinterland ports – SMTP – regarding-

The undersigned is directed to state that during the deliberations of Inter Ministerial Group consisting
of representatives of Ministry of Shipping, Ministry of Commerce and Planning Commission under
the Chairmanship of Secretary (Revenue), one of the issues that came up was the requirement of
filing Sub-Manifest Transshipment Permit (SMTP) application and consequent delay in clearance
of goods meant for transshipment to hinterland ports/ ICDs/ CFSs.

2. The Board has now decided to automate the transshipment of containerized cargo from one
Port to an Inland Port or ICD/CFS where the Indian Customs EDI System (ICES) is operational.
This would involve exchange of messages for Transshipment of Cargo electronically among
Customs, Port authorities, ICDs and Shipping Agents.. The implementation of this module
is a significant step in the ongoing Business Process Re-engineering initiatives of the department.
This will also reduce the congestion and dwell-time of cargo at the ports and will contribute
to reduction in transaction costs of imports.

3. In the automated Transshipment Module, the requirement of an application by the carrier will
be done away with and the SMTP (Sub manifest Transshipment Permit) portion of the IGM itself

Customs Procedures and Functioning of Container Freight Stations and Ports • 69

will be treated as a request for transshipment. Carriers will not be required to separately file an
application for this purpose. They will however be required to indicate the code of the transporter
undertaking the transshipment (e.g. CONCOR) in the IGM. For this purpose, a field is being added
in the IGM format to capture this information. The ICES system will allow transshipment of those
containers against whom the port of destination is indicated as ports other than the port of discharge.

4. The transshipment permit information will be sent to the carrier, the transporter undertaking
the transshipment, custodian of the gateway port, and the ICES system at the destination ICD.
Transshipment permit can also be printed by the carrier in his office or in the custom house.

5. The transshipment permit transmitted to the recipient port/ ICD/ CFS will automatically be
converted into an IGM and the Shipping Lines will not be required to file any fresh IGM in respect
of such containers.

6. The transporter performing the transshipment activity will be required to electronically submit
a container arrival report to the ICES system at the destination ICD/ CFS in a specified format.
The container arrival report will be matched with transshipment message received from the Gateway
Port and a ‘landing certificate ‘ message will be generated by the inland port/ICD/CFS which
will be transmitted to the Gateway port for closure of IGM Lines.

7. Instructions on debit of Bonds for transshipment are also being modified to enable the carrier
to carry out debit and credit in the Bonds. Circular in this regard is being issued separately.

8. Presently the automated transshipment module is implemented between JNPT and ICD
Tughlakabad. Detailed transshipment procedure is being worked out by the Directorate of Systems
and will be circulated to all automated custom locations for informing the trade before
implementation.

9. Receipt of this Circular may be acknowledged.

10. Hindi version will follow.

Yours faithfully

Sd-
(Anupam Prakash)
Under Secretary to the Government of India
Phone No.23094182

70 • Report of the Inter Ministerial Group

Circular No. 47/2005-Cus

F.No.450/66/2005-Cus.IV
Government of India
Ministry of Finance

Department of Revenue
Central Board of Excise & Customs

New Delhi, November 24th, 2005

To,
All Chief Commissioner of Customs,
All Chief Commissioner of Central Excise,
All Chief Commissioner of Customs & Central Excise,
Director General, Directorate of Revenue Intelligence,
Director General, Director General of Systems and Data Management,
[email protected]

Sir,

Subject: Simplified bond module covering both custodianship and transshipment –multiplicity
and multi-utilisation of bond- Reg.

I am directed to invite your attention to above subject and to say that an Inter Ministerial Group
(IMG) headed by Secretary (Revenue) examined various issues relating to simplification of customs
procedures. IMG felt that the issues relating to multiplicity of bond and multi-utilization of bond need
to be addressed. The Group felt that if the same person is required to file two different bonds to a
single Customs authority under different provisions of customs procedures, then one single bond
can incorporate all such requirements and the existing Bond module of the EDI should be utilized
for all requirements of bond. The Group felt that it would ensure better monitoring and simplification
of procedure.

2. In this connection reference is invited to Board’s Circular No. 78 /2001-Cus dated 7th December,
2001 wherein it is prescribed that the custodians of ICDs/CFSs operating as carriers of transshipment
cargo between gateway ports and their ICDs/CFSs shall amend the terms and conditions of their
bank guarantees executed with Customs for custodianship of ICDs/CFSs to cover safety and
security of cargo being transhipped by them. The details of such bank guarantee shall be informed
to the Commissioner of Customs having jurisdiction over the gateway port. The custodians of
ICDs/CFSs shall be allowed to tranship the cargo against the said bank guarantee and they will
not be required to execute a separate bank guarantee for transshipment.

Customs Procedures and Functioning of Container Freight Stations and Ports • 71

3. Further Board’s Circular No. 34/2000-Cus. dated 3rd May, 2000 provide for ‘mother bond’
in order to avoid multiplicity of bond for same purpose i.e. transshipment. As per the provisions,
the carriers may execute Mother Bonds instead of individual bonds. Such bonds will be accepted
and maintained by the Commissioners of Customs at the port of origin and these will be like
running bonds. These will be credited on receipt of proof of safe landing of containers at the port
of destination. The value of Mother Bond can be arrived on the basis of the average number of
containers carried in the vessels, time taken for submission of proof of safe landing of containers
at the destination ports, frequency of such transshipment as well as the average value for containers.

4. In view of existing circulars efforts should be made to reduce multiplicity of bond. Further EDI
system of Customs has a ‘bond module’ which will be fully utilized once ‘message exchange facility’
is operationalised between two ports. The implementation of bond module for re-crediting is in
conformity with the Regulation 4 of the Goods Imported (Condition of Transshipment) Regulation,
1995 which provides for discharge of the bond on production of certificate of transfer of goods at the
destination. After such discharge of the bond amount covering a particular transaction; the value of
mother bond will be credited to that extent. In an online environment, such re-credit to the extent of
the bond amount which gets discharged as stated above, would be done automatically in the system
on receipt of electronic message between Gateway port and destination port or between two customs
stations. Directorate of Systems and Data Management would make efforts to implement the same
in electronic environment in time bound manner.

5. The above instructions may be brought to the notice of all concerned for effective
implementation.

6. Hindi version follows.

Yours faithfully

Sd-
(Anupam Prakash)
Under Secretary to the Government of India
Phone No.23094182

72 • Report of the Inter Ministerial Group

Circular No. 50/2005-Cus

F.No.442/12/2004-Cus.IV (Pt.II)
Government of India
Ministry of Finance

Department of Revenue
Central Board of Excise & Customs

New Delhi, dated December 01, 2005

To,

All Chief Commissioner of Customs,
All Chief Commissioner of Central Excise,
All Chief Commissioner of Customs & Central Excise,
All Commissioner of Customs,
All Commissioner of Central Excise,
All Commissioner of Customs & Central Excise,
Director General, Directorate of Revenue Intelligence,
Director General, Directorate of Systems and Data Management,
[email protected]

Sir,

Subject:- Procedure for disposal of unclaimed/ uncleared cargo under section 48
of the Customs Act, 1962, lying with the custodians – regarding

I am directed to invite your attention to the report of the Task Force which was constituted by the
Central Board of Excise and Customs as a sequel to the observations of the C & AG, vide order
F.No. 442/12/2004-Cus.IV (Pt) dated 27.6.2005 to examine the various issues arising out of the
audit review, and to suggest effective measures to be put in place as a permanent mechanism for
expeditious disposal of the backlog of accumulated, unclaimed, uncleared and confiscated cargo,
and also to ensure that no delays in disposal take place in future. The Chief Commissioner of
Customs, Delhi Zone was the Chairman of the Task Force.

2. Looking at the considerable success in expeditious disposal of Section 48 unclaimed cargo
as a result of the interim special initiatives taken by government vide Circulars dated 17.10.1997,
13.01.2000, and 28.01.2004, the Task Force viewed that the procedure laid down in the Ministry’s
last Circular No. 7/2004 dated 28.01.2004 should be put in place as a permanent measure with some
modifications.

Customs Procedures and Functioning of Container Freight Stations and Ports • 73

3. The matter has been examined by the Board. In order to ensure expeditious disposal of
unclaimed/ uncleared cargo, under section 48 of the Customs Act, 1962, and lying with custodians,
whether in the private or public sector, the following procedure should befollowed:-
(i) The procedure shall be applicable only to unclaimed/uncleared cargo landed at least one year

prior to the date on which the list of goods for customs “no objection” is prepared. In other
words, this liberalized procedure would not apply to goods which have been lying uncleared
for a period less than one year from the date of their import.
(ii) The custodian will furnish the list of items to be considered for disposal to customs. The list
will contain complete particulars such as Bill of Lading/Airway Bill number, description of
goods, weight, name of the consignee/consignor, etc. A notice shall simultaneously be issued by
the custodian to the consignee at his known address and also displayed on the custodian’s notice
board stating that if the goods are not cleared within 15 days they be sold by the custodian
under Section 48 of the Customs Act, 1962.
(iii) Customs shall scrutinize the list with their own files/records and intimate the custodian a list
of disputed or stayed consignments or consignments required to be retained for any
investigation/adjudication/court proceedings, motor vehicles or negative list items as restrictions
imposed under allied acts. If no such intimation is received from the Customs within 15 days,
the custodian shall go ahead with the disposal of the goods.
(iv) The responsibility for the disposal shall exclusively be with the Custodian who shall fix a
reserve price arrived at by a panel of Government approved valuers appointed by the Custodian
[irrespective of any value arrived at by the Customs Appraisers earlier], which should include
an expert on the product line.
(v) The customs will not insist on complete and detailed inventory of the contents of the
consignments to be drawn in their presence. They shall, instead choose 10% consignments
for which detailed inventory shall be made in their presence for sample check.
(vi) The disposal of the goods shall be made by public auction/ E-auction/tender. The date of the
public auction/ E-auction/tender should be adequately publicized in advance through national
newspapers (both in English and Hindi), departmental website as well as in at least one
newspaper in the local language. The values assessed by the approved valuers appointed by
the custodians shall form the “reserve price”. The maximum number of auctions/tenders to
which a lot is subjected should be four, with the goods to be necessarily sold for the highest
bid in the last auction/tender regardless of the reserve price fixed. Reserve price fixed would
not be applicable in case of fourth auction/tender. In the event of the goods not being disposed
of in the first auction, subsequent auctions/tender should be conducted in time bound manner.
(vii) Guidelines issued by the Central Vigilance Commission as available at CVC website
http://www.cvc.nic.in particularly letter No.98/ORD/1 dated 18th December, 2003 should also
be kept in view.
(viii) The bidding shall be on cum-duty price and duty shall be back-calculated from the sale price

74 • Report of the Inter Ministerial Group

[Local taxes like Sales Tax etc, will however have to be charged/recovered extra from
the buyer].
(ix) The custodian should fix a date for holding the auction/tender and communicate such date to
the officer in charge of the customs station and the concerned Assistant Commissioner/Deputy
Commissioner. The Assistant Commissioner/Deputy Commissioner would nominate,
if necessary, an officer not below the rank of Superintendent /Appraiser to witness the
auction/tender. Customs shall not withdraw any consignments at the last moment from the
auction/tender except with the written approval of the Commissioner of Customs.
(x) For each consignment which is sold, the custodian will file a consolidated Bill of Entry, buyer-
wise, for assessment of the effective rate of duty by the Customs. Auctioned goods will be
allowed out of charge only after the duty assessed is paid by the custodian [Refer Unclaimed
Goods {Bill of Entry} Regulations, 1972].
(xi) The sale proceeds shall be shared as per the provisions of section 150 of the Customs Act, 1962.

4. For uncleared/ unclaimed goods which are lying for a period less than one year, the custodian
would get the reserve price fixed by a panel of Government approved valuers appointed by the
Custodian. However, if these goods remain unsold and pass into the category of landed-more-than-
one-year-prior, then the custodians can sell the same following the independent procedure without
any reference to customs, and adjusting the number of auctions/tenders to which the lot was already
subjected to against the prescribed number of four such auctions/ tender. It is re-iterated that for the
valuation of goods landed at least one year prior to the date of seeking NOC, Customs should not
associate with the valuation of the goods lying uncleared with the custodian, however, both reserve
price and bids would be approved by the Customs. This is to ensure that the custodians do not cast
the responsibility for unrealistic fixation of the reserve price on customs.

5. The above instructions may be brought to the notice of all concerned immediately through
appropriate Public Notice.

6. Receipt of this Circular may kindly be acknowledged.

7. Hindi version will follow.

Yours faithfully

Sd-
(Anupam Prakash)
Under Secretary to the Government of India
Phone No.23094182

Customs Procedures and Functioning of Container Freight Stations and Ports • 75

Circular No. 52/2005-Cus

F.No.442/12/2004-Cus.IV (Pt.II)
Government of India
Ministry of Finance

Department of Revenue
Central Board of Excise & Customs

New Delhi, dated December 09, 2005

To,

All Chief Commissioner of Customs,
All Chief Commissioner of Central Excise,
All Chief Commissioner of Customs & Central Excise,
All Commissioner of Customs,
All Commissioner of Central Excise,
All Commissioner of Customs & Central Excise,
Director General, Directorate of Revenue Intelligence,
Director General, Directorate of Systems and Data Management,
[email protected]

Sir,

Subject:- Procedure for disposal of unclaimed/ uncleared cargo under section 48
of the Customs Act, 1962, lying with the custodians – regarding

I am directed to invite your attention to the Board’s Circular No. 50/2005-Cus dated 01.12.2005
on disposal of unclaimed/ uncleared cargo, under section 48 of the Customs Act, 1962. Para 3
of the said Circular deals with the disposal of unclaimed/uncleared cargo ‘landed more than one year
category’ while para 4 of the Circular deals with the disposal of uncleared cargo landed ‘less than one
year category’. Field formations have raised doubt over the applicability of para 4 to disposal of cargo
‘landed less than one year category’.

2. The matter has been examined by the Board. In order to clearly state the intention behind the para
4 of the Circular No. 50/2005-Cus dated 01.12.2005, it has been revised as follows,-

“4. For uncleared/ unclaimed goods which are lying for a period less than one year, the custodian
would get the reserve price fixed by a panel of Government approved valuers appointed by the

76 • Report of the Inter Ministerial Group

Custodian. Customs shall not associate itself with the valuation of the such goods lying uncleared
with the custodian. However, both reserve price and bids would be approved by the Customs. Further,
if these goods remain unsold and pass into the category of landed-more-than-one-year-prior, then the
custodians can sell the same following the independent procedure as detailed in para 3 without any
reference to customs, and adjusting the number of auctions/tenders to which the lot was already
subjected to against the prescribed number of four such auctions/ tender.”
3. Para 4 of the Circular No. 50/2005-Cus dated 01.12.2005 would be replaced with the text as
mentioned above.
4. The above instructions may be brought to the notice of all concerned immediately through
appropriate Public Notice.
5. Receipt of this Circular may kindly be acknowledged.
6. Hindi version will follow.

Yours faithfully
Sd-

(Anupam Prakash)
Under Secretary to the Government of India

Phone No.23094182

Customs Procedures and Functioning of Container Freight Stations and Ports • 77

Instruction dt. 24.11.05

F.No.450/66/2005-Cus.IV
Government of India
Ministry of Finance

Department of Revenue
Central Board of Excise & Customs

New Delhi, November 24th, 2005

To,

All Chief Commissioner of Customs,
All Commissioners of Customs,
[email protected]

Sir,

Subject: Conversion of foreign going vessels to coastal vessel- Customs duty collection of ship
stores consumed during coastal run-reg.-

The undersigned is directed to bring your kind attention to Circular No. 58/97, dated 6-11-1997
issued vide F. No. 450/77/95-Cus. IV on the procedure for collection of duty on ship stores
consumed during coastal run. During the deliberations of Inter Ministerial Group consisting of
representatives of Ministry of Shipping, Ministry of Commerce and Planning Commission under
the Chairmanship of Secretary (Revenue), one of the issues that came up was the delay being caused
by Customs authorities for conversion of foreign going vessel to coastal vessel. It was also mentioned
by the Ministry of Shipping that whenever any vessel is converted from foreign going to coastal,
customs require a notice of three days. Such conversions are quite frequent in the tanker industry.
Sometimes due to exigency of operation, a coastal vessel is required to be converted to foreign going
for loading at foreign ports, when the vessel is waiting at the anchorage out side the port limits in
India. In such cases, customs require the vessel to be brought inside the port at berth for carrying out
conversion formalities.

2. It may be noted that as per the provisions of Circular No. 58/97, dated 6-11-1997 issued vide F.
No. 450/77/95-Cus. IV, there is no requirement of advance notice of three days for converting foreign
going vessel into coastal vessel. All field formations should scrupulously adhere to the provisions
of Circular No. 58/97, dated 6-11-1997. Paragraph 3 of the above circular mentions about the option
of payment of duty on the entire quantity of Bonded stores carried by the ship, or only on estimated
quantity of the Bonded stores that may be utilized during coastal run when the vessel is converted

78 • Report of the Inter Ministerial Group

into coastal vessel. Similarly steamer agent is entitled to refund of duty in case of unutilized duty
paid stores. The assessment in all such cases should be completed within prescribed time. However,
it should be ensured that conversion of foreign going vessel to coastal vessels and vice versa should
be expeditious and without any delay. Further, in case of exigencies, when the vessel is anchored
outside the port limit, full cooperation should be extended to the master of the vessel/ steamer agent
for getting the expeditious conversion of costal vessel to foreign going vessel, if necessary by
deployment of Customs staff to such vessel for completing the conversion process and to subject
to safeguard of revenue.
3. All concerned may be directed to comply with above instructions.

Yours sincerely,
Sd-

(Anupam Prakash)
Under Secretary to the Government of India

Ph.-23094182

Customs Procedures and Functioning of Container Freight Stations and Ports • 79

Instruction dt. 24.11.05

F.No.450/66/2005-Cus.IV
Government of India
Ministry of Finance

Department of Revenue
Central Board of Excise & Customs

New Delhi, November 24th, 2005

To,
All Chief Commissioner of Customs,
All Commissioners of Customs,
[email protected]

Sir,

Subject: Movement of Less than Container Load (LCL) cargo from one CFS to another CFS -reg.-

The undersigned is directed to inform that during the deliberations of Inter Ministerial Group
consisting of representatives of Ministry of Shipping, Ministry of Commerce and Planning
Commission under the Chairmanship of Secretary (Revenue), one of the issues that came up was
that the containers loaded with LCL cargo may be allowed to be moved from one CFS to another
CFS for stuffing as this would help optimum utilization of space in a containers/ truck.

2. Board has issued several circulars on streamlining the procedure for transshipment and
consolidation of cargo and movement of goods from gateway port to hinterland CFS/ ICD. The
stuffing/ re-working of containers is being done at Gateway ports. The issue of permitting mobility
to containers/ trucks to pick cargo from nearby CFS of the same port was discussed and it was felt
that jurisdictional Commissioners may allow this.

3. Accordingly, it is decided by the Board that jurisdictional Commissioners by way of issue of suitable
standing order should allow the movement of containers/ trucks loaded with LCL cargo from one CFS
to another CFS under their jurisdiction so as to have optimum utilization of space in a containers/
truck. They should, however, ensure that the facility is not misused and revenue is safeguarded.

Yours sincerely,
Sd-

(Anupam Prakash)
Under Secretary to the Government of India

Ph.-23094182

80 • Report of the Inter Ministerial Group